EABL pays dividends after Sh6.9bn profit

August 23, 2013


EABL pays dividends after Sh6.9bn profit/FILE
EABL pays dividends after Sh6.9bn profit/FILE
NAIROBI, Kenya Aug 23 – The East African Breweries Limited (EABL) Board has recommended a Sh4 per share dividend payment after posting a net profit of Sh6.9 billion for the year ended June 2013.

The profit marks a 37 percent drop from Sh11.2 billion over a similar period in the 2012 financial year.

Sales and administrative costs hit Sh31.6 billion and Sh7.6 billion respectively while net sales grew by 10 percent in Kenya and Tanzania and flat in Uganda.

EABL Managing Director Charles Ireland attributes the drop to the softening consumer economy in Uganda, a duty rise that slowed the beverage alcohol market in Tanzania as well as the absence of the one-off gain of Sh3.6 billion from the sale of its stake in Tanzania Breweries.

“In Uganda the economy weakness affected the business as well publicized donor funding reduced thus less money in their economy and in Tanzania we had a 25 percent increase in exercise tax at the start of the year and we did not record what we would have wished to be,” he said.

Ireland said that the net finance cost rose due to a combination of increased borrowing for operations and interest costs on the Sh19.5 billion additional debt borrowed in November 2011 in order to purchase SABMiller Africa’s 20 percent shareholding in Kenya Breweries Limited making it a wholly owned subsidiary of EABL.

“The net finance costs of this debt now cover the full 12 months of this financial year ended 30th June 2013, compared to only seven months during the prior financial year,” he said.

Revenue grew by 6.4 percent to Sh59 billion recorded in the year 2013 from Sh55 billion recorded in the 2012 financial year with premium beer and reserve spirits driving the growth.

“Premium beer grew by 18 percent, Ready to drink 47 percent, mainstream beer 3 percent and emerging beer 12 percent which are Balozi, Senator and Allsops,” he said.

On the spirits side, reserve spirits grew by 276 percent, premium spirits 22 percent, mainstream spirits 6 percent, and emerging spirits 32 percent.

Kenya continued to be EABL’s key market, accounting for 67 percent of net sales value, Uganda 16 percent and Tanzania 12 percent.

Gross profit margin fell to 46.56 percent compared to 48.39 percent in the 2012 financial year driven by a 10 percent rise in Cost of goods sold.

The increase in cost of goods sold was occasioned by Inflation in costs of utilities; distribution and warehousing and increased depreciation, which management intends to mitigate through increased emphasis on local sourcing of cereals, and increased efficiency in the manufacturing and distribution process.

However the company is looking at building a new distribution house in Kenya to cut on administrative costs. Capital expenditure during the year was at Sh6 billion covering efficiency and expansion projects in Kenya, increased packaging in Uganda and environmental efficiency improvements in Tanzania.

The proposed final dividend of Sh4 brings the total dividend for the year at Sh5.5, which is 37 percent lower than 2012.

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